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HALIFAX, May 1, 2014 /CNW/ - Holloway Lodging Corp. (TSX: HLC) ("Holloway") is pleased to announce that it has entered into an agreement for the acquisition of the Days Inn® hotel located in Whitecourt, Alberta for a purchase price of $8.9 million.
The purchase price implies a cap rate in excess of 11.0% based on estimated first year net operating income. Holloway will pay cash on closing of $3.0 million and fund the remainder of the purchase price by way of a $5.0 million first mortgage and a $0.9 million vendor take-back mortgage. The acquisition is expected to close at the beginning of June 2014.
The Days Inn® hotel is located in Whitecourt, Alberta where Holloway currently owns a Super 8® hotel. Whitecourt is located 110 miles northwest of Edmonton and its economy is driven by the forestry and oil and natural gas industries, particularly the emerging Duvernay shale play. The Days Inn® was built in 2007 and has 79 rooms, including 21 suites, a meeting room and fitness center. As part of the transaction, Holloway will also acquire 1.2 acres of adjacent land.
Michael Rapps, Holloway's Chairman, stated "This acquisition fits our strategy of acquiring select service hotels in secondary Canadian markets and has the added benefit of being in a market in which we currently operate. This should enable us to generate synergies with our existing Super 8® hotel in Whitecourt." Mr. Rapps added: "The acquisition is expected to be accretive to Holloway. We expect this property to contribute at least $1.0 million of net operating income in our first year of ownership. We also have the flexibility of developing the adjacent land acquired or selling it, which would result in a lower effective purchase price."
ABOUT HOLLOWAY LODGING CORPORATION
Holloway is a real estate corporation focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets. Holloway owns 17 hotels with 1,718 rooms. Holloway's shares trade on the TSX under the symbol HLC.
This press release contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to Holloway's future outlook and anticipated events or results and may include statements regarding Holloway's future financial position, business strategy, financial results, plans and objectives. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what Holloway currently expects and there can be no assurance that such statements will prove to be accurate. Some of these risks and uncertainties are described under "Risk Factors" in Holloway's annual information form for the year ended December 31, 2013 which is available on Holloway's profile on the SEDAR website at www.sedar.com. Holloway does not intend to update or revise any such forward-looking information should its assumptions and estimates change.
SOURCE: Holloway Lodging Corporation
For further information: Please contact Michael Rapps, Chairman, at (416) 855-1925 or Jane Rafuse, Chief Financial Officer, at (902) 443-5101.